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CS Professional · Insolvency and Bankruptcy - Law and Practice · Pre-Packaged Insolvency Resolution Process (Elective 7.5)

In the PIRP of Lakshmi Polymers Ltd, the CoC votes with 70% of voting shares to terminate the process before any resolution plan is approved. A fraud proceeding under section 67A against an officer is pending. Which outcome is correct?

Termination succeeds because 70% exceeds the required 66% of voting shares. The Adjudicating Authority terminates the process, provides for the manner of continuing pending section 67A and similar proceedings, and the corporate debtor bears the process costs. The proceedings do not lapse automatically.

  1. AThe Tribunal must pass a termination order under the Code and provide for the manner of continuation of the pending section 67A proceedings; the debtor bears the process costsCorrect
  2. BThe termination fails because the vote is below the required 75%
  3. CThe pending section 67A proceedings lapse automatically on termination
  4. DThe process costs are borne by the RP personally

Explanation

Where the CoC decides by at least 66% of voting shares to terminate, the Adjudicating Authority passes the termination order and provides for how avoidance, section 66 and section 67A proceedings continue. The corporate debtor bears the costs. 70% exceeds 66%, and the proceedings do not lapse.

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